Russia, Turkey and Iran – why the US has declared economic war against them

Since August, the US has implemented new economic sanctions against Iran, Russia and Turkey. JAMnews looked into the details of the sanctions and the reasons behind them

A rally in Helsinki during the meeting between the presidents of the US and the Russian Federation. 15 July 2018. REUTERS/Grigori Dukor

Russia, Turkey and Iran have recently had economic sanctions imposed on them by the US. JAMnews looks at the details and reasons for their implementation.

Iran

In 2015, the western world celebrated the end of a years-long crisis in relations with Iran when the 5 + 1 nuclear deal was signed. Only three years have passed, and the crisis has returned. In August 2018, the USA reimposed sanctions against Iran and withdrew from the deal.

Why did the crisis arise and why were sanctions reinstated against Iran?

The reason behind the reinstatement of the sanctions was Iran’s nuclear programme, its alleged desire to acquire nuclear weapon technology and also the anti-American rhetoric of Iran’s leadership.

Sanctions were placed on Iran by the USA in 1979, when the American government forbade American citizens and companies to cooperate or engage in business with Iran.

In 1996, the US expanded the ban and also threatened European countries with sanctions should they cooperate with Iran.

Why the sanctions were lifted and the results thereof

In the 2000s, negotiations began between the US, Europe, China and Iran and went on for more than ten years, ending only in 2015 with the conclusion of the Joint Comprehensive Plan of Action (JCPOA). The plan was signed by the USA, the UK, Russia, France, China, Germany and Iran.

Its aim was to limit Iran’s nuclear programme, which would be exchanged for the lifting of sanctions against Iran.

Over the past two and a half years since the signing of the JCPOA deal, the following results were achieved:

• Iran began to increase oil production and returned to the global mark (however, over this short period of time the economy did not particularly benefit from this phenomenon).

• Investments, mostly European, began to enter the country.

• Iran’s nuclear programme was frozen.

Why did the USA leave the agreement and renew sanctions against Iran?

During the campaign season in 2016, current president of the USA Donald Trump consistently voiced his disapproval of the US remaining in the JCPOA deal. Trump asserted that Iran was not fulfulling its part of the deal and stated on multiple occasions that it was one of the worst deals in the history of the United States.

Trump officially stated that the US would leave the nuclear deal on 8 May 2018. The Iranian currency, the rial, started to plummet at the time. A number of experts say that the rate at which it fell and continues to fall is a sign of the unstable economic situation in the country, which is at risk of entering a deep economic crisis.

One week ago, the exchange rate was 90 000 rials to the dollar. Now, it is 117 000 to the dollar.

Trump’s promise became reality on 1 August. The US renewed sanctions against Iran. The sanctions forbid American companies from trading with Iran in gold, alluminium, coal and a number of other materials. Moreover, the US plans to limit Iran’s currency operations in dollars which will put even more pressure on the rial.

Europe and the UK have come out against the decision and stated that they will continue to work within the framework of the 2015 JCPOA deal.

The USA has prepared a second set of sanctions which will come into effect on 4 November 2018 if Iran refuses to negotiate with the US. Experts say that these sanctions could be far more difficult for Iran to deal with as they include limitations on the import of Iranian oil.

“Trump is trying to unite the allies of the US in the Middle East, and realises that the only common uniting factor is their dislike for Iran,” Jonathan Marcus wrote for theBBC.

Against the loss of value of the Iranian currency, unemployment is also rife. Water and electricity shortages are also acutely felt, as is inflation. Protests against the economic policies of the government are becoming larger and larger.

However, many analysts say that America reinstating its sanctions will not only fail to hurt the standing of Iranian President Rouhani, but will instead strengthen it.

“The actions of the US will push Iranians to rally around the current authorities with the aim of resisting the growing external threat,” believesCNNcorrespondent John Defterios.

Russia

One day after the sanctions against Iran were reinstated, news broke that the US would also introduce sanctions against Russia.

Why were sanctions introduced against Russia?

The American authorities have come to the conclusion that the Kremlin was behind the poisoning of former Russian spy Sergey Skripal and his daughter Yulia in Great Britain.

The poisoning of the Skripals, which took place in March, has contributed to a deterioration in relations between Europe, the US, Canada, the UK and Russia. The US State Department believes that the Russian state ‘used chemical or biological weapons in violation of international law’.

How will the sanctions work?

The sanctions against Russia will be introduced by the US in two stages. In the next two weeks, a ban will be put in place preventing American companies from conducting business with Russian companies who deal in products that may be used for military purposes.

Three months later, if the American government does not receive a guarantee that Russia will no longer use chemical or biological weapons, new sanctions will be imposed. They may include bans on American banks from accrediting any Russian company, a ban on imports from Russia, a ban on the Russian airline flag carrier Aeroflot and a number of other issues.

The first results of the sanctions

On 9 August, the Russian ruble hit a two-year low against the dollar and euro. A number of Russian stocks also fell. Aeroflot’s stocks suffered particularly, and lost eight per cent of their value.

Turkey

The USA has imposed sanctions against the Minister of Justice and the Minister of Internal Affairs of Turkey; all American assets and accounts of Abulhamit Gul and Suleyman Soylu have been frozen.

Why have sanctions been imposed?

The sanctions have been imposed over the detention in Turkey of American pastor Andrew Brunson. The Turkish authorities accuse him of collaborating with Fethullah Gülen, who, in their opinion, organised the attempted coup in the country two years ago. Brunson has been in prison since October 2016.

Why have US-Turkey relations taken a turn?

In recent years, relations between Ankara and Washington have deteriorated for several reasons. Turkey is dissatisfied with the fact that the US has refused to extradite Gulen to Turkey, and with America’s support of Kurdish militias in Syria. The American authorities are in turn irritated by the fact that pastor Brunson has yet to be released.

Consequences of the sanctions

The introduction of American sanctions on Turkey has affected the Turkish lira. It is currently plummeting at a record rate. As of 1 August, the exchange rate was one dollar to six lira, while just six months ago, it was one dollar to four lira. Turkish President Recep Erdogan said: “Do not forget that they have dollars, but we have our nation, our god.”

As in Iran, America instating sanctions has led to a societal split in Turkey. However,according tothe New York Times, most of the opposition parties support President Erdogan on this issue.

The media, social networking sites and Turkish streets are full of anti-American rhetoric, which in the conditions of a political crisis are, of course, to the benefit of Erdogan.

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